Private Equity and Women

“Do we settle for the world as it is, or the world as it should be?”
Michelle Obama

In 2014 the World Economic Forum hosted a private workshop with 30 senior leaders in private equity funds, pension plans and academia. The aim of the workshop was to explore the root causes of the lack in gender diversity in private equity. At the time, c. 5% of senior roles in private equity were undertaken by women, and only 13% of junior roles. Then shortly after this in 2015, the New York Times ran the headline that “Fewer Women run big companies than men named John”.

This is despite McKinsey in 2013 finding a strong link between gender diversity within senior management and corporate performance. An HBR survey focused on venture capital also found a dramatic correlation between diversity and financial outcomes. The industry was clearly lagging behind even the most conservative of industries (by comparison in corporate law 17% of senior roles were undertaken by women).

Diversity - financial services - equal and different - Fram SearchSo where is the private equity industry today? Preqin recently released data that just 17.9% of employees worldwide are women and c. 9.9% are in senior roles. Depending on how the data is calculated, the industry may have moved as much as 100% in six years, but contrast this with the S&P 500, which for the first time achieved 25% female representation on boards in 2019 and it's clear that whilst efforts have been considerable, the journey isn't finished.

Gender diversity clearly wasn’t going to change overnight, and great steps have been made by many firms over the last few years and we should acknowledge this. However, we must also acknowledge that there is much work left to do. Private Equity is an industry that requires exceptional levels of talent and to ignore 50% of the possible talent pool isn’t just unfair, it’s bad for business and investors.

“We felt there was a lack of role models, no women to aim to be like. To be able to imagine yourself in that role by seeing someone who looks like you.”
Judith Milne, Former Chair of the Royal Aeronautical Society

It starts at the beginning

Diversity - financial services - superhero girl - Fram SearchPrivate equity isn’t an industry many people know much about, and so it’s hard for our schools to talk knowledgeably about this sector to their pupils. However, as the insightful quote from Judith Milne points out above, it’s particularly hard when those you do see in those roles, on the television perhaps, don’t look like you.

More so than ever, if firms want to encourage girls to join the private equity industry, they need to engage in out-reach programmes to inspire and engage those talented people from the next generation. Another area we’ve seen grow is clients inviting those from more diverse backgrounds for insight days, which I’m sure have been invaluable to attendees.

Application processes

Thames Water recently saw a surge in women applying for manual jobs after they made their wording in adverts less masculine. It identified words like “competitive”, “confident” and “champion” as masculine coded. Since they changed the language, the proportion of female applicants surged by 46%.

Firms needs to demand more from their recruitment partners. Much of this industry’s hiring is done via search, but at junior levels advertising plays a part and clearly language needs to change.

A coronavirus bonus

Studies have shown that women are still more likely to take on more child responsibilities at home and to take more timeout from work. The latter point has been shown in some studies to be perceived as a lack of professional commitment. Combine this with an industry with long hours, plus time spent commuting, and the problem is compounding the problem of a lack of senior female advancement.

However, in our recent survey an overwhelming number of people, 92% of respondents, favour some sort of flexible working. We feel it will be hard for firms to demand their staff return to offices five days a week without some flexible working arrangements. We can only see this helping female workers and the benefits for employers will be numerous, including increased retention.

Changing expectations

private equity - gender diversity

Many were aware of gender diversity five years ago, but we can’t remember any female candidates ever asking us about a prospective employer’s gender diversity. However, now candidates ask us all the time about a firm’s board composition. In effect, the message is “if I don’t see any female leaders, what does that say about my career prospects if I’m a woman in that firm?”.

A key part of our client meetings now is asking firms if they are a signatory to the Women in Finance Charter (please click here for a list of signatories). It’s not just a sales tool or corporate platitudes, it matters.

Investors too demand firms display modern management attitudes and as part of their due diligence they are asking more firms about their diversity policy. Investors are very aware of the research supporting diverse workforces being more successful.

There isn’t an “old girls club”

I was talking to a friend of mine recently, who has a successful career in sales, and she made the point that in her experience there wasn’t an “old girls' club”. There wasn’t an established network that aspiring females could tap into, and there were few female mentors. Therefore, female networking events are very important to help build these useful ties.

About Fram

Fram Search was founded in 2010 by Simon Roderick, who led the Wealth & Asset Management practice of a London based search firm. Our clients include asset managers, hedge funds, family offices, private equity firms, and private wealth investment managers.

Fram provides clients with both sector and functional recruitment expertise and our team has helped clients secure both individuals and teams. For more information, please contact us on 01525 864 372 or email sroderick@framsearch.com

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